Since early June, Wall Street's major stock indexes have all rallied to fresh record highs. Artificial intelligence (AI) has been the main driver behind the surge in stock valuations, and the Magnificent Seven have done much of the heavy lifting.

These are among Wall Street's most influential businesses, and each is dependent to some degree on the AI revolution for future growth prospects. That makes it useful to look beyond headline revenue growth and focus on how much cash these businesses are expected to generate, especially because many of them are still reinvesting heavily in new infrastructure, products, and services.

Ranking the Magnificent Seven by forward-year cash flow

While the long-used price-to-earnings ratio remains a familiar tool for evaluating mature businesses, it does not fully capture the valuation of growth stocks such as the Magnificent Seven. Because these companies aggressively reinvest cash flow into high-growth initiatives, future cash flow is a more useful measure of value.

According to Wall Street's consensus cash-flow-per-share estimates for next year, the Magnificent Seven rank from most attractive, or cheapest, to least attractive as of July 23 as follows:

• Meta Platforms: 9.44 times estimated forward-year cash flow
• Amazon: 10.36
• Microsoft: 13.04
• Alphabet: 14.87
• Nvidia: 15.79
• Apple: 28.82
• Tesla: 64.71

Based on future cash flow, neither electric-vehicle maker Tesla nor iPhone maker Apple appears particularly attractive. By contrast, Meta and Amazon stand out in a stock market that remains historically expensive. The spread between the group also highlights how different their business models are: some are still in rapid expansion mode, while others already produce substantial cash but trade at much richer valuations relative to what they are expected to generate next year.

Meta and Amazon stand out amid a pricey market

Meta Platforms is the cheapest of the Magnificent Seven stocks, which likely reflects the immediate benefits the company is seeing from integrating generative AI into its social media advertising platforms. The ability to tailor static or video messages to users is improving click-through rates and strengthening Meta's already strong ad pricing power.

Meta's largely ad-driven business is also closely tied to the health of the U.S. economy, which spends a disproportionate amount of time expanding. Although advertising is not a game-changing operating model, businesses have shown a willingness to pay a premium for Meta's services.

Meanwhile, Amazon's ancillary businesses have become the company's brightest spot. Although its dominant online marketplace still accounts for most of its revenue, Amazon Web Services (AWS) generates the bulk of its operating income.

Since AWS integrated generative AI and large language model solutions into its platform, sales growth in this much higher-margin segment has reaccelerated. Combined with strong subscription pricing power from Prime and sustained double-digit advertising growth, Wall Street analysts expect Amazon's full-year operating cash flow to more than double between 2025 and 2028.

Although bargains remain scarce, Meta and Amazon fit the bill.